Former lawmakers donate cash while cooling off

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Rep. Robert Cramer (D-AL) during a House Appropriations Defense Sub-Committee hearing on the Northrop Gruman Tanker Contract.
John Shinkle

“Not particularly,” he said in a telephone interview, contending that his personal relationships with the members he has given to are stronger than any campaign donation.

He says those who view the donations as a form of soft lobbying “don’t really understand what’s going on in politics or government.”

Bill Buzenberg, executive director of the Center for Public Integrity, says the ability of ex-members to work for influence firms and give money “makes a mockery of the rules” intended to create separation between lawmaking and lobbying.

“If you’re leaving Congress, you shouldn’t be able to move right in and make deals, which is what giving campaign contributions is all about,” Buzenberg said.

The one-year ban on post-retirement lobbying, as described on the House ethics committee website, is clear: “A former member may not seek official action from any current member, officer or employee of either the Senate or the House, or from any current employee of any other legislative office.”

But the committee’s further guidance makes equally clear that there are kosher ways to influence the process.

For example, former lawmakers are allowed to advise clients who are seeking to influence Congress — making them one step removed from the process. “Such a background role does not pose the risk of improper influence, since the current officials are not even aware of the former official’s participation,” the ethics committee guidance says.

“The rules are written as loosely as possible,” Buzenberg said.

Cramer and McCrery are not alone in figuring out how to be influential without actually lobbying. Former Republican Reps. Chip Pickering of Mississippi and Dave Hobson and Deborah Pryce of Ohio are among the other ex-lawmakers who are cooling off while working at firms that lobby.

But Cramer, a former House appropriator, and McCrery, who was the top Republican on the Ways and Means Committee, stand out for the large sums they have given and the expectation that they will be high-profile lobbyists in the near future.

Cramer also has taken advantage of a feature of campaign finance law that allows current and former congressional candidates to give unlimited amounts of money to party committees. While other influence seekers are limited to giving $30,400 to a party committee in the current two-year election cycle, Cramer has donated $50,000 to the Democratic Congressional Campaign Committee.

McCrery sent $20,000 to the NRCC and $15,000 to the NRSC, and he gave more than $70,000 to candidates and PACs — including one he turned over to Rep. Charles Boustany (R-La.) when McCrery retired. His campaign account is now below $8,000, and he points out that he would have kept his PAC had he thought campaign contributions would influence his former colleagues.

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."

Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.

"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"

Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."

Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."